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56 and Wondering if I Can Pull the Plug
Old 04-22-2014, 07:23 PM   #1
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56 and Wondering if I Can Pull the Plug

Hi,

Ive posted a few times here but mainly lurking and consuming. Wondering what your thoughts are on my portfolio, and ability to retire once I hit Rule of 75 next February. I am 56 now.

My DW, aged 55, is retired already, and has a pension of $28K which we will start in July, 2015.
We plan to take Social Security at FRA of 66; looking at about $25-30K each for that.
We are looking at spending $90K per year not including taxes. Part of this is for LTC, and $12K per year for health care (a swag).
We have no debt.

Assets Taxable:
Cash $276
VFIAX $218
VDIGX $ 51
JNHYX $ 81
VG Variable Annuity $321
(Invested 60% stock 40% bond)
Company Stock $ 20

Total Taxable $967

Assets Tax-Deferred:

Company 401(k) $579
(Invested 60% stock 40% bond)
VFIAX $244
VTSAX $364
VBTLX $326

Total Tax-Deferred $1,512

Total Assets $2,479

What do you think? I've used FIRECalc and my own homegrown spreadsheet with good results. We have no requirement to leave anything behind - it's OK if our last check bounces

Also any recommendations on AA?

Thanks!
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Old 04-23-2014, 01:50 AM   #2
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I'd dial down on healthcare costs before you pull the plug since you and your wife are too young for Medicare. And when you are old enough, you'll likely want a Medicare supplement. My employer had always paid my medical (at group rates) and I was shocked at the cost when I looked into paying it myself. I ran my own retirement calculations, too, but a year before I turned in my resignation I paid less than $500 for a CFP to independently run my numbers. Cheap sleep insurance.
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Old 04-23-2014, 07:20 AM   #3
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IMO your're good to go. A simple way to look at it is to say that you'll hold aside $900k for $90k a year from ER to FRA. That leaves you $1.6m for FRA and later.

Once SS begins your withdrawals will be about $40k a year ($90k - $50k SS) and you have $1.6m left which is only a 2.5% WR. The above assumes that your investments have a real return of 0% but it is likely they will do better than that.

The bad news: You probably could have retired earlier.

Go to your state exchange and see what premiums will be for ER to FRA and then add a reasonable provision for deductibles and co-pays.

YMMV.
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Old 04-24-2014, 10:47 PM   #4
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I also think you are probably good to go. Healthcare costs are a big unknown and hard to predict. I assume you or your wife do not have health care through employer after you leave work? Chances are you can get your actual taxable income down enough to get some subsidies to defray cost under ACA.

Assuming you work until Feb 2015, at that point you get zero for pension? If so why the rule of 75 (age plus years of service = 75, I assume) being important? Just quit now, unless you left out something. If you get something, that will only make it better financial picture. Worse case you have extra spending for one year until wife's pension kicks in.

Your wife gets $28K starting July 2015, and will be 56. You said you need $90K for expenses, not incl taxes. Leaves $62K needed out of savings. If you need $62K/year times 10 years until SS, that is only $620K (not incl inflation, just straight numbers). Even if you need to budget additional $TBD to cover taxes, I do not think it will be more than around $10-12K max per year. So add another $120K to cover taxes to be conservative and you have used $740K out of the after tax funds which is $967K (again no inflation). You still have approx $227K left, and all of your pre-tax funds. Then at 66, factor in SS of $50K, and you have $78K of your $90K covered.

You have no real risk that I can see. Unless your expenses drastically change increase, it seems that you are good to go now.
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Old 04-25-2014, 12:09 AM   #5
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Thanks Chevy!
Quote:
Originally Posted by 38Chevy454 View Post
I assume you or your wife do not have health care through employer after you leave work?
Well, sort of. We have group coverage through my wife's employer at 'market' rates.

Quote:
Originally Posted by 38Chevy454 View Post
Assuming you work until Feb 2015, at that point you get zero for pension? If so why the rule of 75 (age plus years of service = 75, I assume) being important?
My wife gets the pension, not me, and we've decided to take hers next year to get a bump in the annual amount. Rule of 75 gets me an additional year of vesting in company stock, so it's worth the wait IMO. Plus it's another year of savings and the job isn't really killing me yet.

Quote:
Originally Posted by 38Chevy454 View Post
Just quit now...You have no real risk that I can see. Unless your expenses drastically change increase, it seems that you are good to go now.
I like the way you think :-). I will probably hang on OMY. Our expenses are predicated on downsizing, and we'll need some time to execute the sale of our home...Thanks again.
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